Snapple 2012 Annual Report Download - page 23

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Integrated business model. Our integrated business model provides opportunities for net sales and profit growth through the
alignment of the economic interests of our brand ownership and our manufacturing and distribution businesses. For example, we
can focus on maximizing profitability for our company as a whole rather than focusing on profitability generated from either the
sale of beverage concentrates or the bottling and distribution of our products. Additionally, our integrated business model enables
us to be more flexible and responsive to the changing needs of our large retail customers by coordinating sales, service, distribution,
promotions and product launches and allows us to more fully leverage our scale and reduce costs by creating greater geographic
manufacturing and distribution coverage. Our manufacturing and distribution system also enables us to improve focus on our
brands, especially certain brands such as 7UP, Sunkist soda, A&W, Squirt, Vernors, Canada Dry, Hawaiian Punch and Snapple,
which do not have a large presence in the bottler systems affiliated with The Coca-Cola Company ("Coca-Cola") or PepsiCo, Inc.
("PepsiCo").
Strong customer relationships. Our brands have enjoyed long-standing relationships with many of our top customers. We
sell our products to a wide range of customers, from bottlers and distributors to national retailers, large food service and convenience
store customers. We have strong relationships with some of the largest bottlers and distributors, including those affiliated with
Coca-Cola and PepsiCo, some of the largest and most important retailers, including Wal-Mart Stores, Inc. ("WalMart"), The Kroger
Co., SUPERVALU, Inc., Safeway Inc., Publix Super Markets, Inc. and Target Corporation, some of the largest food service
customers, including McDonald's Corporation, Yum! Brands, Inc., Burger King Corp., Sonic Corp., Wendy's/Arby's Group, Inc.,
Jack in the Box, Inc. and Subway Restaurants, and convenience store customers, including 7-Eleven, Inc. Our portfolio of strong
brands, operational scale and experience across beverage segments has enabled us to maintain strong relationships with our
customers.
Attractive positioning within a large and profitable market. We hold the #1 position in the U.S. flavored CSD beverage
markets by volume according to Beverage Digest. We are also a leader in the Canada and Mexico beverage markets. We believe
that these markets are well-positioned to benefit from emerging consumer trends such as the need for convenience and the demand
for products with health and wellness benefits. Our portfolio of products is biased toward flavored CSDs, which continue to gain
market share versus cola CSDs, but also focuses on emerging categories such as teas and juices.
Broad geographic manufacturing and distribution coverage. As of December 31, 2012, we had 18 manufacturing facilities
and 115 principal distribution centers and warehouse facilities in the U.S., as well as three manufacturing facilities and seven
principal distribution centers and warehouse facilities in Mexico. These facilities use a variety of manufacturing processes. We
have strategically located manufacturing and distribution capabilities, enabling us to better align our operations with our customers,
reduce transportation costs and have greater control over the timing and coordination of new product launches. In addition, our
warehouses are generally located at or near bottling plants and geographically dispersed to ensure our products are available to
meet consumer demand. We actively manage transportation of our products using our own fleet of approximately 6,000 delivery
trucks, as well as third party logistics providers on a selected basis.
Strong operating margins and stable cash flows. The breadth of our brand portfolio has enabled us to generate strong operating
margins which have delivered stable cash flows. These cash flows enable us to consider a variety of alternatives, such as investing
in our business, repurchasing shares of our common stock, paying dividends to our stockholders and reducing our debt.
Experienced executive management team. Our executive management team has over 200 years of collective experience in
the food and beverage industry. The team has broad experience in brand ownership, manufacturing and distribution, and enjoys
strong relationships both within the industry and with major customers. In addition, our management team has diverse skills that
support our operating strategies, including driving organic growth through targeted and efficient marketing, improving productivity
of our operations, aligning manufacturing and distribution interests and executing strategic acquisitions.
OUR STRATEGY
The key elements of our business strategy are to:
Build and enhance leading brands. We have a well-defined portfolio strategy to allocate our marketing and sales resources.
We use an on-going process of market and consumer analysis to identify key brands that we believe have the greatest potential
for profitable sales growth. We intend to continue to invest most heavily in our key brands to drive profitable and sustainable
growth by strengthening consumer awareness, developing innovative products and extending brands to take advantage of evolving
consumer trends, improving distribution and increasing promotional effectiveness. We also focus on new distribution agreements
for emerging, high-growth third party brands in new categories that can use our manufacturing and distribution network. We can
provide these new brands with distribution capability and resources to grow, and they provide us with exposure to growing segments
of the market with relatively low risk and capital investment.